How Polyvore CEO Jess Lee got started

When Jess Lee was a product manager at Google in 2008, she would often unwind in the evening by playing around on Polyvore, a fashion web site that allows users to create shareable collages of clothing and interior designs. Her mentor at the time was a Google VP named Marissa Mayer. Lee couldn’t have known that seven years later, she would be CEO of Polyvore and would sell the company to Yahoo, now led by her old Google colleague.

When Jess Lee was growing up in Hong Kong, she assumed she would end up going to art school, since she loved reading and drawing comics. “But Asian parents don’t really like that,” she tells Fortune, only half-jokingly. “They told me they wouldn’t pay for art school, so I picked a more traditional path.”

She headed to Stanford to study engineering. When she marked down computer science as her planned major when she applied, she knew next to nothing about the subject. But it turned out to be love at first sight. By her senior year, Lee had a job offer to be an engineer at Intuit, “working on QuickBooks or TurboTax or something,” as she recalls. At the eleventh hour, a recruiter from Google called. It was 2004, and the company was super-hot, but much smaller than it is today, and still known primarily as a search engine. The recruiter told Lee about Google’s associate product manager (APM) program. She responded by asking, “What’s a product manager?”

Lee got the answers to that and to many more of her questions at her job interview with Google, and through the interview process she met Bret Taylor, who went on to become CTO of Facebook, and Marissa Mayer, who later became CEO of Yahoo. Both would prove to be key mentors to Lee throughout her career.

Mayer became a sounding board for Lee even before the Stanford grad began at Google. The new college grad was nervous, she says. Her mindset went like this: “I have to be on a team; I’m pretty antisocial. I don’t know if I can do that. And I have to design product instead of just doing engineering and coding.” She shared her fears with Mayer, a Google VP and fellow Stanford grad, who gave her advice that Lee has never forgotten. Mayer said that when she had had to decide between two things, the best choices in her life had been when she chose the more challenging path. Lee went for it.

Lee first worked on Froogle, which was Google’s shopping engine. After a short time, she moved to Google Maps, where she was one of only two product managers (the other handled local search) and felt true ownership over a product. Then she began working on a project called My Maps, which gave users drawing tools and location pins so that they could create their own maps. Soon, at only 23, Lee was running My Maps with five other engineers. This intimate group was passionate and eager to come in to work each day, which Lee says was the key to the project going so smoothly. “It was like a startup within the Maps team,” she recalls happily. “We were testing new things all the time. Everyone was so excited about the potential of the project, and because of that, everyone was so much more productive.”

By 2008, Lee was spending a lot of her free time in the evenings using Polyvore, which had been around for a few months but was not yet widely popular. It was a mix of everything she loved—art, technology, and fashion. Pasha Sadri had come up with the idea in 2006 when he and his wife were remodeling their house. He co-founded the company with Jianing Hu and Guangwei Yuan, software engineers he knew from when he worked at Yahoo.

That same year, Bret Taylor, who had left Google to focus on his startup FriendFeed, approached Lee about coming to work with him. Lee met Taylor and his co-founder, Jim Norris, for coffee. But FriendFeed seemed to her like something Facebook could copy all too easily. (And in fact, Facebook later acquired FriendFeed, primarily to bring in Taylor, who would become its CTO.) Lee was hesitant to join FriendFeed, but the meeting got her excited about startup life.

When she walked out of the coffee meeting with Taylor and Norris, Lee happened to look across the street and noticed a small corner store called Pasha’s Market. A funny coincidence, she thought: it got her thinking about Pasha Sadri, whom she had never met but whom she knew as a friend of a friend (and Polyvore shared an office with FriendFeed). When she got home from work that day, she sent Sadri an e-mail with unsolicited, extensive feedback about his site. The e-mail, which Lee shared with Fortune, is pretty blunt. She politely introduced herself (“Nice to meet you!” she began, adding a smiley-face) before getting down to brass tacks by instructing Sadri, “loading images in search results is slow,” “I want image rotation,” “could you add a lightweight way of bookmarking items for future use,” and “ ‘Fgnd’ and ‘Bgnd’ are confusing … ‘Send to Front’ or ‘Send to Back’ would be more user-friendly.”

Sadri wrote back and invited Lee to meet him for coffee. They clicked, and by the end of their chat he was asking her to come work with them.

Click to buy the book. Photo: Brad Barket/Getty

Lee joined Polyvore as a product manager. Her thinking was that, like Google, it would be a sink-or-swim environment and she would learn a lot so that eventually, she could go do her own thing. But soon, she says, “Polyvore kind of became my own thing.”

The site made all the fixes she had suggested in her e-mail and then, under her guidance, cleaned up other areas as well. Lee loved the simplicity of Polyvore and wanted to keep it strictly focused on its strength: the “sets” editor and the strong community that used it.

In 2010, Sadri, Yuan, and Hu approached Lee and told her they wanted to start recognizing her as an official co-founder of the company. Lee was wary. She wasn’t a founder, she reasoned, because she hadn’t been there from day one. The trio told her that she had joined in the company’s first year, she was its first hire after the three founders, and she had begun focusing it right away. As far as they were concerned, she was having as big an impact as they had by creating it.

Lee acquiesced, though she is aware that some might question the title. “I always feel a little bit weird about it, so when anyone asks, I try to explain that I’m like an honorary co-founder,” she says. Indeed, some critics are quick to point out that Polyvore wasn’t Jess Lee’s idea—that credit goes to Sadri. (A splashy 2010 New Yorker feature on Polyvore quoted Lee extensively, and arguably introduced her to the tech world.)

As the Polyvore staff grew, she and Sadri fell into a partnership where they were essentially running the company together. In 2012, Lee and Sadri decided that the CEO role was evolving: It had previously been all about building the product, Polyvore.com, but it needed to shift toward building the company, Polyvore Inc. Sadri and Lee switched roles: She became CEO, Sadri became CTO.

That May, a user on the Q&A forum site Quora posted a question asking, “Why did Polyvore remove Pasha Sadri as CEO and replace him with head of product Jess Lee?” Sadri himself posted a reply: “As we grew beyond a product/engineering team into other functions, we decided to swap roles so we could spend our time on things we are each best at. I now get to spend more time on product and technology. Jess oversees other functions in the company, something she is great at.”

Thinking of Apple as inspiration, Lee soon led the charge to kill off a number of features, even some that were performing well. Her first cut was the site’s “Ask” section, which allowed users to solicit and give out style advice. Some users were sad to see it go; one of them took to Quora to ask why Polyvore was shutting it down. “It was by no means an easy decision,” responded Sadri. “Decisions about what not to do are just as important, if not more important, than decisions about what to do/keep.”

In January 2013, Lee and Sadri made further simplification a companywide initiative by sending an “all-hands note” that asked every single person at Polyvore to come up with a list of everything he or she worked on. “Our goal is to get the company into its simplest possible state,” Lee wrote. “I’d like every team to make a list of what work you do on a regular basis. Identify what is most impactful to the company. Then figure out what to cut.”

That e-mail about cutting features may sound like the kind of missive that would scare employees and cause anxiety, but Lee says she was happily surprised by the team’s reaction. “It also signaled that it’s okay to fail sometimes, like if we built certain features and they aren’t working out, that’s okay, as long as we get rid of them,” she says. “Many companies talk the talk but don’t walk the walk. It takes active effort and an investment of time to go back and delete things.”

In 2012, Lee expanded the company’s geographic reach by opening an office in New York City. One month after opening the Manhattan office, Polyvore treated a small group of 12 active users from all over the world (including France, Chile, and Brazil) to a trip to New York for a night out with Lee and the community managers. “We told them, ‘Guys, you mean the world to us, and without you guys there would be no site,’ ” Lee says.

The CEO still loves to draw and read comic books, and is grateful for the continued mentorship of women like her mother and Marissa Mayer. She gives back to the community of women in business in quiet ways, behind the scenes. (She does not love public speaking.) At a Women 2.0 conference in 2013, she signed on not to speak, but to mentor at the lunch. She volunteers at “women in tech” events outside of Polyvore and always has her eye on which women at her company seem as though they could run their own startups one day. “I make sure they know that I think they could do it,” she says. “And I try to make myself helpful to them, like if they have ideas, or if they want to get a better sense of how the business works.”

Polyvore has also attracted attention for its corporate culture. On Halloween, the company holds a costume contest in which groups dress up according to a theme and then decorate one of the conference rooms. On Lee’s 30th birthday, in October 2012, her co-workers all dressed in exactly what she wears every day—combat boots, black jeans, and a black top with cutouts—and it took her until the end of the day to finally get the joke.

Now Lee will rejoin her mentor Mayer at Yahoo (the price of the acquisition was not disclosed), where she’ll work to incorporate Polyvore’s products—and unique culture—into the larger ecosystem of the purple giant.

Yahoo goes after fashionistas with acquisition of Polyvore

After buying up the teen haven Tumblr in 2013, Yahoo is going after fashionistas. The tech giant has acquired Polyvore, a company best-known for letting its users create collages of outfits, beauty, and lifestyle items.

The two companies announced the deal on Friday; financial terms were not disclosed. Founded in 2007, Polyvore has become a force in the e-commerce world through its visual collages (Polyvore calls them “sets”) of items that users can purchase through the site. By 2012, it had more than 20 million users and was driving significant social commerce to retailers. It’s also developed a range of products, largely centered around advertising, and has a long-term aim to become the first stop for any fashion purchase, whether the customer is in the research-and-planing phase or ready to buy.

But perhaps what really made Polyvore a winner is that it built a search and discovery engine for fashion and lifestyle items, something that’s key in those categories but traditional engines like Google weren’t serving well (and arguably still aren’t), as Matrix Partner’s Dana Stalder, who led the firm’s investment in Polyvore in 2009, tells Fortune.

So the move by Yahoo is about tapping into Polyvore’s revenue hose through e-commerce. Expect the company to also use Polyvore to beef up Gemini, Yahoo’s new native advertising network. The deal will also help bolster Yahoo’s “MaVeNS” — or mobile, video, native, and social — numbers, which CEO Marissa Mayer has made her new focus. In the most recent quarter, the MaVeNS category brought in $399 million in revenue, up from $249 million a year ago, and now representing 35% of Yahoo’s traffic-driven revenue.

The acquisition reunites old friends — Before Polyvore CEO Jess Lee joined the fashion site, she worked for Mayer at Google and has called her a mentor. In addition, three of Polyvore’s co-founders were former Yahoo engineers. In 2012, Lee made Fortune‘s 40 Under 40 list.

Stalder also shared that while Polyvore wasn’t looking to sell — it’s been profitable or nearly almost every quarter — another public company approached it with talks of an acquisition, which ultimately led to Polyvore’s deal with Yahoo.

As part of the acquisition, Polyvore’s teams will join Yahoo’s offices in Sunnyvale, San Francisco, and New York City, and Lee will report directly to Yahoo SVP of publisher products Simon Khalaf. Though Polyvore’s product will continue to operate on its own, some of its technology and presence will be integrated into Yahoo’s fashion and lifestyle properties.

Polyvore has raised a total of $22.1 million in funding from Matrix Partners, Goldman Sachs, Benchmark Capital, DAG Ventures, Harrison Metal, and others.

(The story has been updated with comments from Dana Stalder, partner at Matrix Partners, one of Polyvore’s investors.)

Saudi Arabia is having a tough summer; all while Lockheed Martin LMT has a banner year. The latest confluence of these trends came Wednesday as the U.S. State Department approved a $5.4 billion sale of 600 Lockheed-made PAC-3 missiles to Saudi Arabia, alongside an additional half billion dollars in ammunition for various smaller weapons. The deals still have to be approved by Congress, but such deals typically are.

“The proposed sale will modernize and replenish Saudi Arabia’s current Patriot missile stockpile, which is becoming obsolete and difficult to sustain due to age and limited availability of repair parts,” the Pentagon said in it’s written notification to Congress of the pending deal. “The purchase of the PAC-3 missiles will support current and future defense missions and promote stability within the region.”

The sale of so many PAC-3 missiles—the most advanced missile for the Patriot missile launcher and built by Raytheon RTN—is the latest in a string of high-priced, high-profile arms deals between the U.S., Israel, Saudi Arabia, and other Gulf Cooperation Council allies in the region. It marks the first major arms deal since the Iran nuclear deal struck earlier this month raised the prospect of reduced sanctions against the state. The deal would lift Iran’s conventional arms embargo within five years and leave the country free to pursue long-range missile technologies within eight.

That could be bad for regional security, but it’s a boon for defense contractors who have already cut deals with Middle Eastern states worth roughly $6 billion in the months leading up to the historic nuclear accord. U.S. defense companies like Boeing BA, Northrop Grumman NOC, and General Dynamics GD are all poised to reap the benefits of a Middle East arms race. Given the threat, (or at least the perceived threat) posed by Iran’s collection of ballistic missiles, Raytheon and Lockheed Martin look to have a busy year ahead.

“I think we saw quite clearly at Camp David when President Obama met with several of the Gulf partners back in May that missile defense cooperation would be a prime area of investment going forward as a way to bolster partner defense,” says Melissa Dalton, a Middle East defense and security expert at the Center for Strategic and International Studies. While Saudi Arabia already has Patriot missiles in its arsenal, this deal—and ones that are likely to follow it—provides a needed upgrade for Saudi Arabia’s missile defense technology. It also sends an unambiguous signal to other allies and adversaries in the region that the U.S. is standing by its commitment to its Gulf allies.

Ballistic missiles, like those in Iran’s arsenal, arc upwards through the atmosphere to very high altitudes before returning to Earth at extremely high speeds. Lockheed’s PAC-3 is designed to intercept incoming ballistic missiles as they descend rapidly toward their intended targets. Each missile packs a sophisticated Ka-band millimeter wave sensor, which is a complicated way of saying it possesses all the high-tech gear it needs to track and intercept incoming ballistic or cruise missiles mid-flight.

At least four of the GCC member states—Kuwait, Bahrain, the United Arab Emirates, and Saudi Arabia—field Patriot missile launch systems, and last year Qatar also announced that it would buy Patriots. Earlier this year Saudi Arabia purchased $2 billion worth of Patriot missiles, and just last week the U.S. Department of Defense announced that it would buy $1.5 billion more for allies including Taiwan and South Korea but also the UAE, Kuwait, Qatar, and—wait for it—Saudi Arabia.

It’s a good time to be selling Patriot missiles, but that’s not all Middle Eastern states are buying in the wake of the Iran deal. A separate arms transfer valued at $500 million approved by the State Department this week would provide Saudi Arabia with ammunition for a number of weapons fielded by the Royal Saudi Land Forces. That includes everything from explosive anti-tank rounds for 105-millimeter cannons to Claymore mines to fragmentation grenades.

A third potential sale announced yesterday would provide the UAE with $335 million worth of AN/AAQ 24(V) Directional Infrared Countermeasures (DIRCM) Systems and associated parts and systems (the deal will mostly benefit Northrop Grumman). These are sensors and infrared jammers rather than conventional weapons, designed to spoof or disable the infrared tracking technology on a variety of shoulder-launched anti-aircraft missiles.

The UAE wants such systems installed on all of its “Head of State aircraft,” representing the other side of the Iranian threat that will likely buoy defense sales outside of ballistic missile defense and conventional arms. Long hamstrung by an international arms embargo, Iran has grown deft at hectoring its neighbors through militant proxy groups, many of which are considered terrorist organizations by the U.S. The threat of Iranian-funded terrorist activities is further fueling feelings of distrust and insecurity in the region, and could push sales of systems designed to counter such asymmetric threats.

But the spiking demand for newer and better arms isn’t all about Iran, Dalton says. “It’s interesting to note that even beyond the Iran deal there are other challenges in the region that the Saudi acquisition will be helpful for,” she says. “I think while the Iran threat is the overriding concern, they have other challenges to contend with as well.”

Case in point: The ongoing Houthi rebellion taking place just across Saudi Arabia’s southern border in Yemen, which Saudi Arabia’s air force has intervened. It’s one of several conflicts simmering across the region in places like Syria, Libya, and elsewhere that have toppled governments, disbanded militaries, and circulated a whole lot of weaponry and unrest around the entire Middle East. In June, Houthi rebels in Yemen seized Yemeni government stores of Scud missiles and launched at least one into Saudi Arabia in response to Saudi air strikes. Saudi Arabia shot down that Scud with a Patriot missile.

Yahoo surpasses revenue expectations but serves up big loss

Fresh off the heels of the first big step to finally spin-off its ownership in Chinese e-commerce giant Alibaba (Yahoo owns 15% of it), the purple giant is turning its attention to its “MaVeNS,” or mobile, video, native and social ads. Here are the report’s highlights:

What you need to know: Yahoo’s adjusted revenue for the quarter at $1.04 billion saw no change from the previous quarter or the year-ago quarter, and it just barely surpassed analyst forecasts of $1.03 billion. The company said it made a net loss of $22 million, or 2 cents per share, from a profit of $270 million, or 26 cents per share, a year ago.

Excluding certain costs, Yahoo’s quarterly profit was 16 cents per share, falling short of the 18 cents that analysts had expected.

The big number: This quarter, Yahoo CEO Marissa Mayer is all about what she calls “MaVeNS,” or the mobile, video, native and social advertising markets. The conglomeration of sources brought in $399 million in revenue this quarter, up from $249 million a year ago, and now representing 35% of Yahoo’s traffic-driven revenue. In the previous quarter, MaVeNS brought in $363 million in revenue.

What you might have missed: Last week, Yahoo filed a legal document to the SEC as the first step to spinning off its ownership in Chinese e-commerce company Alibaba. Subject to final IRS approval, the new entity will be a freestanding public company likely worth around $30 billion, based on Alibaba’s current stock price. The spin-off will likely impact much of Yahoo’s cashflow, something Mayer will have to make up for as she weathers the post-Alibaba business.

Apple, Microsoft, Yahoo: What to expect from this afternoon’s biggest earnings reports

Corporate earnings season kicked off in earnest this week and disappointing results from a handful of major companies sent the stock market tumbling on Tuesday.

The Dow Jones Industrial Average is down more than 200 points on the day with the stock declines of companies such as IBMIBM and United Technologies UTX — both of which reported sales drop-offs — dragging down the blue-chip index.

The earnings bonanza is just getting started, though, as this afternoon’s crop of corporate results includes quarterly figures from a number of potential market-movers, from Apple to Chipotle.

Here’s what to expect from the earnings reports scheduled for after today’s market close:

1. Apple

This is earnings event the market waits for every quarter and today is no exception as investors hope that Apple AAPL will break down the sales numbers for the Apple Watch. The watch launched in April — the first major product launch under CEO Tim Cook — and there have been contradictory reports on the product’s sales performance — some good, some bad. The consensus seems to be that those numbers will not be made public, though Fortune‘s Philip Elmer-DeWitt polled two groups of analysts that predicted the tech giant sold somewhere between 4 million and 4.5 million of the smartwatches last quarter.

Meanwhile, Apple is expected to post strong third-quarter numbers, with analysts surveyed by Thomson Reuters predicting 32% revenue growth to $49.3 billion. Analysts polled by Fortune expect Apple to post earnings per share of $1.81 after reporting EPS of $1.28 during the same period last year. Those analysts also predict a 40% increase in the number of iPhones sold in the quarter, to 49.4 million phones. Apple sold 61.2 million iPhones in the second quarter.

Microsoft’s MSFT fourth-quarter revenue is expected to have dropped more than 5%, to just over $22 billion. Sales of the software giant’s Windows operating system stalled as customers await the release of Windows 10 later this month. Revenue from the cloud business, the company’s focal point going forward under CEO Satya Nadella, should continue to clock big gains, but that unit remains a small portion of Microsoft’s overall business.

Meanwhile, the company is likely to post significant losses for the quarter due to a one-time impairment charge of $7.6 billion that stems from Microsoft’s much-maligned purchase of Nokia’s handset business. Microsoft also faces a restructuring charge of at least $750 million related to job cuts. Earlier this month, the company said it would cut another 7,800 positions in the second round of massive job cuts in less than two years since Nadella took over.

During this afternoon’s conference call, investors will be listening closely for any commentary from company leaders on the highly-anticipated Windows launch, the company’s efforts to reverse the decline in Windows sales, and any progress updates on the company’s cloud-first, mobile-first strategy.

3. Yahoo

With its sinking share price and an expected dip in sales, Yahoo’s YHOO best bet for exciting the market this afternoon will likely be to share some positive news regarding the company’s planned spin off of its $32 billion stake in Chinese e-commerce giant Alibaba BABA. Last week, Yahoo officially filed plans for the spin off, but the transaction could come with a big tax hit. Investors could also be interested in hearing more about Yahoo’s move into legal online gambling with its updated fantasy-sports app.

Yahoo’s stock is down more than 20% so far this year and the company’s first-quarter sales and profits both declined from the same period last year. Those disappointing results have resulted in investors questioning the turnaround strategy of CEO Marissa Mayer, who is now in her third year on the job. It won’t help that Yahoo is expected to report another decline in both quarterly revenue and earnings.

Chipotle CMG is not quite expected to match its 20% year-over-year sales increase from the first quarter, but second-quarter revenue is still expected to clock in at a strong $1.2 billion, which would represent nearly a 16% bump. However, the quarter could also see Chipotle’s comparable sales growth drop into single digits after a 10% increase in the first quarter that came in below analysts’ expectations.

Chipotle’s first-quarter numbers suffered a bit from the fast-casual chain’s infamous carnitas shortage, which arose after Chipotle parted ways with a pork supplier that violated the company’s strict standards for the humane treatment of animals. The company’s stock is still down about 1% for the year, but shares have gained nearly 12% since the start of July — just in time for news that an end to the carnitas crisis is in sight. Investors will certainly be keen to hear more about Chipotle’s pork supply outlook on Tuesday afternoon, along with any feedback on the restaurant chain’s decision to remove all genetically modified organism (GMO) ingredients from its products.

5. GoPro

GoPro GPRO sells a large chunk of its wearable cameras overseas, which makes the company susceptible to foreign currency headwinds stemming from the strong U.S. dollar. But, GoPro — headed by CEO and founder Nick Woodman — reportedly saw strong demand for its line of Hero4 action cameras, which could result in second-quarter revenue that outpaces Wall Street’s expectations. GoPro is expected to report roughly $395 million in sales for the quarter, which would represent a 62% increase year-over-year, according to Thomson Reuters.

GoPro’s stock is down slightly ahead of the earnings report after jumping on Monday following the announcement of a premium content licensing portal as well as a partnership with Toyota MotorTM that will result in 2016 Toyota Tacoma trucks featuring a windshield mount specifically designed to house a GoPro camera. This afternoon, investors will be interested to see GoPro’s outlook, and to hear about strategy going forward, as GoPro continues to navigate its shift from being a camera-maker to a full-fledge media company. The market will also be listening for any information on the company’s reported interest in virtual reality and drones.

Yahoo officially files to spin off Alibaba stake

Yahoo’s spin-off of its huge stake in Alibaba is one step closer to reality.

Yahoo plans to put its shares in the Chinese e-commerce giant into an independent public company that will be called Aabaco Holdings, according to a regulatory document Yahoo filed late Friday. The new company will own Yahoo’s nearly 384 million shares of Alibaba stock, or about 15% of the overall number.

Aabaco Holdings will be a sizable company, at least in terms of value. Yahoo’s stake, one of the few bright spots in its portfolio, is currently worth more than $32 billion.

Yahoo CEO Marissa Mayer announced the split in January, after pressure from investors. The split is expected to be completed in the fourth quarter of 2015, Yahoo said in a statement. Once complete, Yahoo as a company won’t own any of the shares, which will instead be distributed among Yahoo stockholders.

Yahoo’s maneuver is expected to reduce its tax bill when it sells the shares. But the company warned in its filing that it’s awaiting a final confirmation from the IRS on the matter.

Following the announcement, Yahoo’s stock YHOO was 0.9% in after-hours trading, at just above $40 per share.

The spin off includes Yahoo Small Business, a sort of stepchild for the Web portal that sells tools to help small businesses market and sell their goods online. Yahoo had to include it in the new entity for legal reasons.

Yahoo streaming Bills-Jaguars NFL game for free

On Wednesday the company announced that it’s partnered with the National Football League exclusively to stream an upcoming football match. The game—a face-off scheduled for Oct. 25 between the Buffalo Bills and the Jacksonville Jaguars—will be the “first free, live global webcast of a regular-season game,” reports the New York Times.

“We’re thrilled that the NFL has chosen Yahoo for this historic opportunity,” said Yahoo YHOO CEO and president Marissa Mayer in a statement. “It marks a significant change in the way users can access this amazing content.”

The decision represents an experiment for the NFL, which is testing the feasibility of video streaming live sports online. It’s also as a coup for Yahoo, which scored the rights over competitors such as Facebook FB and Google GOOG.

The total cost for that exclusive partnership? Somewhere in the eight-figure range — at least $10 million, according to a CNNMoney source. The official financial terms were not announced by either party.

Brian Rolapp, executive VP of media at the NFL, told Sports Illustrated that “we need to prepare for the future. Have we entered into a new era? Maybe. Maybe not. Obviously TV is still the dominant platform to distribute our games, as it has been for years. But TV is not the only platform any more, and this is the first time in history we have done this with one of our games.”

“We have cast our lot with TV through 2022, so obviously we believe in the power of television for our games. But things are changing, and changing fast, in the media,” Rolapp added. (Read Fortune’s extensive interview with Rolapp here.)

In a recent interview, Yahoo’s head of emerging products Adam Cahan told Fortune the company intended to experiment more with live video. The NFL partnership could help Yahoo land more deals of this sort with sports leagues in the future.

“Through this partnership with Yahoo – one of the world’s most recognizable digital brands – we are taking another important step in that direction as we continue to closely monitor the rapidly evolving digital media landscape,” said NFL commissioner Roger Goodell in a statement.

Here’s why Yahoo stock tanked on Tuesday

Yahoo! Inc.’s YHOO fat stake of 384 million shares in Chinese e-commerce giant Alibaba Group Inc. BABA has long been its crown jewel—but it is quickly turning to a potential weakness.

Shares of Yahoo fell some 7.5% on Tuesday, all in the final hour of trading, due to an unexpected announcement from a single person. At an event in Washington, D.C., an IRS official told a group of lawyers that the IRS is reconsidering a rule governing tax-free corporate spinoffs. The agency is “particularly concerned,” reports the Times, “about spinoffs in which the operating business comprises only a small portion of the new publicly traded company.”

That sounds a lot like Yahoo’s piece of Alibaba. And spinning it off tax-free is precisely what Yahoo and its chief Marissa Mayer had planned.

As news circulated, Yahoo! shares tumbled from Tuesday’s opening price of $44.38 all the way down to $41.01.

Yahoo’s stock plummeted at the very end of the day on Tuesday.

Yahoo has already released a statement that appears to shrug off the IRS news. The company says that, “the IRS’s statement is not specific to Yahoo’s planned fourth-quarter 2015 spin-off of its remaining stake in Alibaba Group and Yahoo Small Business, reflects no change in applicable law, and does not affect previously filed ruling requests,”

Mayer has been under intense pressure over the past year, from activist investors like Jeff Smith of Starboard Value, to hurry up and unload the Alibaba shares.

Yahoo CEO Marissa Mayer was interviewed by Fortune‘s Pattie Sellers on Monday night in New York City, as part of a Fortune Most Powerful Women dinner. What follows is an edited transcript of the conversation.

Pattie Sellers: I’m going to bring up something that you said to me in November of 2012 when I asked you what is Yahoo YHOO.

Marissa Mayer: Okay.

And this is what you said. What we’re really focused on is inspiring and delighting users amidst their daily habits.

That’s right.

On your earnings call, though, you said that Yahoo’s mission is to be an indispensable guide to digital information, yours and the world’s. Are they the same thing? Or has the mission evolved?

I think they are. But I think that one of the things that we did is we first got in there and started thinking about what we wanted Yahoo to be. It was clear that it’s new, it’s sports scores, it’s stock quotes, it’s mail, it’s search.

It’s a lot of things that people use every day. It’s one of the most popular things that people do on their phone. We knew it was going to be a big part of the mobile mission. But I think that the first mission, the way I framed it, it is the same. But it was really viewed more from the company’s perspective.

Nobody wakes up in the morning and says who am I going to turn to for my daily habits, right? And so to fill a real user need and to have a real user proposition you have to say, “Wait. What is it that we’re providing to the users?” Because they don’t really want us to provide for their daily habits.

And so I think as we evolved and crispened it it’s still about search and email and news and sports and finance, now fashion. A lot of the different things that we do. But when you look at it, what was really the role we played throughout the course of the Internet… is to be a guide.

The company started off as Dave and Jerry’s Guide to the Worldwide Web. And with all the proliferation of information, it really comes down to how can we help people make sense of the news out there? How can we help then make sense of their own information, email, how can we help them find the most of what they want to find?

You walked into Yahoo in July of 2012 as a real expert in mobile. VP of local and location services at Google in charge of Google Maps, Google Earth. You had negotiated a really interesting acquisition in Zagat for Google. So now you’re a mobile first company at Yahoo. How has mobile evolved differently from what you expected? And what have you learned?

Well I think that it was so interesting. Because you look at how fast things have come in just since 2012. Because you remember during that interview in November we were talking about which platforms were going to end up mattering. iOS, Android, Blackberry, Windows.

I ended up actually in a little bit of trouble because I made a comment about Blackberries and how we were replacing them with iPhones and Android phones. But, as time has moved on, it really has become a duopoly of those two operating systems. And it’s really become very app-focused.

And it was interesting because, at the time, as I was going around Yahoo putting together my plan, my team, it was funny because people were talking a lot about the mobile web, we were talking about the four or five different platforms that we needed to work on.

People were talking about HTML-5. And we had to pick a lane. And we were late to mobile, so we had to pick correctly. And when I looked at that I just felt like apps were such a more rich experience for users.

And it was becoming clear to me when you look at how much time you spend on your phone, in apps versus the web, it’s almost insane because it’s gone from 84% of the time, 86% of the time, 88% of the time, 90% of the time. It gains like 2% every month.

Which basically means every time you look at your phone, you’re expecting an app-like experience. Which means now if we give you web pages, they’re going to look passé. And so I felt really strongly we needed to bet on native applications as part of our strategy. And really narrow our focus to platforms where we were going to have massive reach. So we picked our lane and we said okay, we’re going to do native apps, we’re going to do native advertising inside of them, we think that’s going to work better than banner ads, which of course is a bit of a bold move because Yahoo is the original success in the banner ad space.

And we still do have a big banner ad business that we call our display business.

But it’s declining.

But it’s declining. And we needed to come up with a new way of basically supporting our sponsors and supporting our content. And so we said native apps on these two platforms, native ads is the exclusive way we’re going to monetize it across search and display.

And we went around basically building that and pulling together a team. So when I think about it, it’s funny because then, in November of 2012, it was a debate. Which operating systems, HTML-5 or apps. And now, even people who don’t necessarily work in technology would say how could that have even been a question?

So 90% of use is within apps?

Is within apps.

And will we possibly get to 100%?

No, because I think you will always have a long tail of information finding queries, reasons that you want to go and see websites. There’s obviously a reason to have a mobile-friendly web site. But I have a feeling that the apps that people tend to use every day are going to be the ones that are installed on their phone, they’re fast, they’re familiar. They tend to address a single use purpose.

And so that’s really where our focus has been. And I think at the time it wasn’t clear. We ended up picking correctly, but I remember at the time it wasn’t clear. I promoted a terrific guy, Adam Cahan. And he turned out to be a brilliant choice because he’s terrific at design and he has a real ability to inspire and motivate people.

And he came via an acquisition, right?

He came in via an acquisition before my time though. So he was there already. But I used to joke that one of the reasons I promoted Adam was because he was one of the few people at Yahoo who agreed with me that apps were going to matter.

And that we needed to build native apps and that we should do native advertising and that there was going to very quickly be two dominant platforms.

So Marissa, talk as much as you can about how you see the advertising market display, programmatic, native evolving over the next five years. And what are you not doing, given your view?

Sure. Well I think we’re chosen to focus on four types of advertising that we think are poised for growth. I will say – you know I signed up to come to Yahoo because I like to work hard and I wanted to work on a big challenge.

But you show up the first day, you have $5 billion worth of revenue. And every revenue stream is in decline, right? And there’s no revenue streams that have a future. And so the very first thing that you have to do is you have to build something that’s big enough, that’s growing fast enough to matter in the context of $5 billion.

And it’s a big loft problem, because if you even find $100 million of new revenue, that’s 2% growth. Or it replaces 2% of decline year over year. And so we had to very quickly develop a mobile strategy, say how do we not get left behind in the we world? How do we define a mobile strategy that can succeed?

And what are the ads going to look like? Because it doesn’t feel like just taking banner ads and making them smaller is a good experience. It just doesn’t seem like where things are going to go.

And so we got very focused on obviously mobile, video, native, and social. So the video, native, and social are really the three ad types that we monetize mobile exclusively through.

And you have this acronym MaVeNS. And so it’s just an easier way to remember it. My husband loves to play Scrabble. The morning of my earnings call I came and said if you had the vowels you want and these four consonants, what would you do? And so he came back with MaVeNS, I was like it’s great.

That’s fantastic.

But MaVeNS is a convenient way to remember it. But we think that video is growing, it’s growing on both desktop and on mobile. But native advertising is what’s made search work from the very beginning. The fact that all of our brains are just terrific pattern-matchers, right.

I studied a lot of science and cognitive psychology in school, and that’s what the brain is great at seeing. You see something and you recognize the pattern. So we always used to talk on the search results page, you want the form and function to follow a certain pattern so people see your result and they’re like I get it, I get it, I get it. They kind of immediately find that pattern.

And so when you’re looking at native advertising, you don’t want the ads to be interruptive. You want them to match the content around them, follow that same form and function. Because that makes it easier for your end viewers, readers, watchers to actually be able to consume the content.

And also, it’s interesting because in many ways I think puts an onus on the advertiser and the publisher to come up with more relevant advertising that can ultimately inform, engage and retain the end users the same way a piece of content would.

Speaking of creating content, you’ve made some very high profile hires, including Katie Couric. Whydid you hire Katie and how do you measure her return on investment?

When I first arrived, it was really important to me that we start to raise the quality of content on Yahoo. And I also wanted us to be able to create some of our own original content. Because otherwise, we’re just republishing other publishing partners. And that’s good, but it doesn’t give you a voice, and it doesn’t necessarily differentiate you. And so we had been working really hard to raise that journalistic standard, raise the quality bar of our content.

And I had been thinking about how to do that. And then Katie was kind enough to actually come and speak at, we had a summit for some CMOs. And I got to interview her. I did a terrible job. But at the end, the last question I said what’s next for Katie Couric?

And she said you know well I think I’ve always been a big fan of digital, I’ve always wanted to work in digital. I was like thank you Katie, thank you. Like our advertisers lapped it up and I was like it’s great, it’s exactly what these CMOs need to hear.

But I just through frankly it was just Katie being polite in terms of what she might want to do next, paying a compliment to the Internet. And so as we walked off stage I said thank you so much for that, that was amazing, and the CMOs are really happy, I’m really happy.

But I was like in your last question, last answer, should we talk? And Katie said yeah, we should talk. And we sort of started to look at the platform for the Internet is huge. And it’s different than broadcast television. But there’s such an opportunity there to be on a different schedule.

To focus more on quality, to take more risks. And I think Katie could talk more about this. But I mean we’ve been so tremendously happy with the quality of the content. The guts I think are as big as prime-time interviews, and in some cases bigger. We get to break a lot of interesting news and viewpoints.

Very seriously though, how do you measure the return? This is a big investment.

You can do things like measure the ads that you’ve sold against those programs and the follow-on views. And they all mean this is a very profitable and good investment.

But I will say, to me it was really more about raising that journalistic standard, getting our name out there as people who really want to participate in news and participate in the dialogue in a different way than just republishing content.

And because part of MaVeNS is the VE, right, the video. And we could tell that people wanted to consume more and more content on video, both on the web as well as on mobile. So we were really excited.

I also think, when I look across the different digital players, one of the things that has set Yahoo apart over the ages is a personality, and a viewpoint. There’s a lot of other places where there’s less personality, or it’s the personality of your friends, and it’s different for each person.

But Yahoo very early in our history started working a lot on creating content, organizing content and not being afraid to entertain and inform. And it felt right to build on that part of the legacy.

Marissa, you’ve made, I think it’s 52 acquisitions since you came in for I think a total of $2.2 billion. What have you learned about making the right acquisition? And what’s the key to making an acquisition succeed?

Sure. Well I mean we’ve done a lot of different types of acquisitions. And we basically think of it in three stacks. We make talent acquisitions. Because one of the very first things we needed to do was bring new entrepreneurial spirit, people, viewpoints to Yahoo.

And so we had a lot of small companies where we would see we needed to get a jumpstart in mobile. They built a beautiful mobile app, it would sort of stall out at a couple of hundred thousand users. It wouldn’t become the next Facebook, Twitter, etc., but still they had a talented team that new how to work together and build a compelling app.

And so … acquisitions where we would buy the company and say okay, please stop working on that app, please build Yahoo Finance for the phone. Please stop working on your app, please build Yahoo News for the phone. And so we did a fair number of those, and that’s the lion’s share of those acquisitions.

We did somewhere it was about building blocks. And I called them building blocks when they were about people, and they’re also about technology. So for example, we bought a company called Aviate. Our three big strategic pillars are search, communications, and digital content.

And we wanted to make sure that when we build a building block we’re getting technology that applies to cone of those pillars. And so, for example, Aviate is contextual search on the mobile phone across apps with deep linking. So it’s a great example of where we don’t just want the people, we want the technology to actually bolster our search offering.

And then you do big transformative strategic acquisitions. Like Tumblr. We also did BrightRoll which is a video advertising network. And Flurry, which is mobile analytics. And my view is the big transformative strategic pieces have to build toward the MaVeNS future. And I will say, to finish the coming in big problem of $5 billion of declining revenue, have to build something big enough growing fast enough to matter.

We did $1.1 billion of revenue last year on the MaVeNS. Which is pretty staggering. From basically nascent to nothing in 2011. So in basically two years to build a $1 billion revenue steam is pretty amazing.

And yes we had a great set of assets, products, users, in order to do it. But my view is I sort of said, we’ve kind of gotten to first base or completed step one. Because if the idea was we needed a $1 billion base of revenue that was growing fast enough, basically it almost doubled year over year last year, that’s growing fast enough and is big enough to matter to a five billion dollar revenue base.

$1 billion of growth that’s going to continue to grow. Everyone believes mobile, video, native, social and the world of digital advertising is going to grow for the next decade at least. We’ve build ourselves a future. And I’m really proud of the team at Yahoo for doing that.

Do you still have this rule of one hundred million, which is investing in products and ventures that have a good shot at reaching one hundred million users and $100 million in revenue? Is that a rule?

Well, not and, or.

Or, or?

You need to have something where can we get a hundred million users. Because we have more than a billion users on Yahoo each month. There’s only three Internet companies: us, Google GOOG and Facebook FB that have that. And we have $5 billion in digital ad revenue, roughly $4 to $5 billion dollars in digital ad revenue.

And there’s only three companies for which that’s true, the same. And so you want to have something where you are building a product that is big enough to matter, to impact users, really provide for their needs. And also matter to the business at scale.

And it’s unfortunate because sometimes you have people who have a really good idea, but it’s an idea that’s going to be $5 million or $10 million a year. And that’s a good startup. And unfortunately when I talk to people who are in that state, you say look, that’s a really good idea and maybe it will get even bigger than you think it will be. But maybe you should go out and try that on your own. Because I’m also – I really admire all the women in the room, especially the mentees who are entrepreneurs.

Because being an entrepreneur is hard. And I think that you should encourage people to do entrepreneurial things. And a lot of cases when you’re dealing with the issue of trying to grow Yahoo where you need $100 million, a few hundred million dollars, $1 billion dollars of fast growing revenue, in some ways it’s better to say hey, go out so your entrepreneurial roots and see what you can grow.

And maybe it becomes big enough that it will ultimately matter. And maybe they’ll just learn a lot about rowing a company and growing a business. But both of those are good.

So here we are, in the Time Warner Center. The building owned by the company that 15 years ago did the most infamous marriage of distribution and content, AOL Time Warner. A deal that failed. Tome Warner spun off AOL, AOL kind of got its act together under Tim Armstrong, danced with you about a possible merger with Yahoo.

And last week, Verizon buys AOL AOL for $4.4 billion. How does that change the landscape? And do you think about the opportunity to partner or to whatever extent with a carrier, with a distribution platform?

Well I think distribution is always a great thing to have, especially in mobile. Because we have terrific distribution on the web. More distribution on mobile is always something that overall is helpful. But I would say I have so much respect for Tim.

We worked together for years at Google and he did a terrific job at AOL. But I will say, whole some people on the outside saw similarities between the companies, we didn’t really. AOL made a big bet on programmatic advertising. Where we’re really making our bets on mobile, video, native, social.

There was some overlap in the video space. But overall I would say that in my view we were taking the ads into a slightly different, into a different space with native. And also, it’s rally important to me that we maintain a brand and a relationship with our users.

That we’re not simply helping other sites monetize. That we actually are providing services to end users that they really value, that they continue to turn to Yahoo to inform, connect, entertain, etc.

How do you think about the landscape shifting, as you see deals like this taking place? And if you don’t want to comment on that deal specifically, there is a movement for distribution and content to kind of marry again. How do you see that developing and what does that mean for Yahoo?

I think for us, as I said we had solid distribution and a global presence and that’s helpful. But I do think we’re constantly looking for new partnerships. We signed a partnership for example in a different way with Mozilla in November gaining somewhere between 3-5% of North American search share.

Which is significant in search. We really brought ourselves back to the place where we had been five years before in terms of overall market share. And it’s a terrific partnership with us. So there’s no question that gaining more distribution for our search.

For our email we recently resigned a partnership with a long time partner for Yahoo in the UK, British Telecomm. So we’re overall really excited to see what we can do in terms of getting mail and search and our digital content distributed more.

Marissa, what advice do you have for these 19 mentees who are going back this week to their home countries and probably rethinking their lives and their careers?

Well I mean I think there’s so much advice, and there’s also the advice that’s useful. I would say – I was just talking about it here with some of my tablemates. But the advice – I had a bunch of good advice.

In fact I participated in Katie’s book a long time ago, The Best Advice I Ever Got. And maybe actually I’ll do both of them. I’ll start with the Katie book on The Best Advice I Ever Got. I was choosing between Google and McKenzie.

And I was trying to make up my mind in 1999 about where to go. And I enlisted the help of a friend. And we were incredibly quantitative and we had matrices and graphs analyzing all my different job offers and where I could go and how it would all work out.

And I found it completely overwhelming. And at the end of the night, I decided I was going to choose my job the next morning. I just had to, it was like May 11 and I had to decide on like May 12th, I had to decide. It’s crazy, you’re graduating in like a month. Stanford graduates a little later than other schools.

But it was like you’re graduating in a month and you just have to pick a job. And at the end of the night I had just really overwhelmed myself. And my friend turned to me and he said, you know, you’re putting a lot of pressure on yourself to pick the right answer.

And he was like I have now studied these 14 choices as much as you have. I’ve thought about them, I’ve graphed them, I understand them as well as you do. And I just have to tell you that I don’t see what you see. I don’t see a right answer here. I see a lot of very good choices.

And then there’s the one that you commit to. And you make great. And I think that as someone who – I often see the world in black and white, and I think that it was really helpful in that moment to say wait, there’s a lot of really great things here.

Now just pick one for reasons you can articulate, for reasons you can’t articulate. But the most important thing is to really commit to it.

And the other piece of advice we were talking about before I came up here was being bold. So I will say I think that being an engineer, I think my tendency is to be more conservative. To be more iterative. Even on innovation and everything, I know I would rather bring out a very small early product and make it slowly better.

And I worked with Larry and Sergey, the founders of Google, for 13 years when I left. And my last conversation, because the announcements were imminent, I was going to have my conversation with Pattie. I would end up having that conversation later that day.

But Sergey gave me all kinds of advice and encouragement. He said he would miss me but also said here are my ideas about Yahoo because obviously at Google we had studied Yahoo a lot. He went into like immediate minutia. Change the logo, which we did. Change like all these different things.

But right as I left I had my hand on the door, I said, “Sergey, it’s time for me to go, I’ve got to go.” And I had my hand on the door and he said, “Marissa wait.” And I turned around and I said – and he looked at me and he said, “Don’t forget to be bold.”

And I actually hear that in my head every single day that I’m at Yahoo. Which is if you really want to create something transformational, if you really want to make a difference in your life and other people’s lives, yes it’s always easy to take the safer incremental choice and to iterate.

And I think that’s sort of more instinctual to me. But Sergey knew that probably the thing that I would need the biggest push on as I left was to remember to be bold. And that has helped me in so many different moments, be it deciding whether or not to acquire Tumblr, deciding what to do with our Alibaba BABA stake that ended up being worth somewhere on the order of $30 to $40 billion.

And so to have that as the refrain in the back of my head was actually really helpful. So hopefully those two pieces of advice help our mentees.

Thank you. Don’t afraid to be bold. That’s the message for everyone. Thank you Marissa.

Sergey Brin’s best advice to Marissa Mayer

Being an engineer who instinctually digs into details, Yahoo CEO Marissa Mayer admits that she’s tended to forget one of the keys to successful leadership: bold action.

On Monday evening at the annual Fortune Most Powerful Women dinner in New York City, Mayer told me on stage that the best leadership advice she ever got came from Google co-founder Sergey Brin in July 2012, on the day she was leaving Google GOOG to join Yahoo YHOO.

It was literally minutes before Yahoo announced that its board of directors had chosen Mayer to be the new CEO, and she was saying goodbye to Brin, whom she had worked with at Google for 13 years. “Sergey gave me all kinds of advice and encouragement. He said he would miss me, but also said, ‘Here are my ideas about Yahoo,'” she recalled. “He went into like immediate minutiae. Change the logo, which we did. Change all these different things.”

Determined to get outside before the big news broke (and to meet her mom, who was right there on Google’s campus, waiting to help her through the transition), Mayer recalls: “I had my hand on the door, saying, ‘Sergey, it’s time for me to go, I’ve got to go.'”

But Brin talked on: “Marissa, wait!” She turned around, “and he looked at me and he said: ‘Don’t forget to be bold.'”

Three years later, she says, “I actually hear that in my head every single day that I’m at Yahoo.”

She passed on this advice to the Fortune MPW audience: “If you really want to create something transformational — if you really want to make a difference in your life and other people’s lives — yes, it’s always easy to take the safer incremental choice and to iterate…But remember to be bold.”

These days at Yahoo, she explained, “that has helped me in so many different moments, be it deciding whether or not to acquire Tumblr, deciding what to do with our Alibaba BABA stake that ended up being worth somewhere on the order of $30 to $40 billion. And so, to have that as the refrain in the back of my head was actually really helpful.”

Marissa Mayer: Why Yahoo-AOL never happened

A merger between AOL and Yahoo, two classic, ad-driven Internet stalwarts that have struggled to return to their early dominance, was the stuff loud-mouthed shareholders dreamed of. When the rumors of such a deal sprung up late last year, the armchair analyses ricocheted around the Web, spelling out the upsides of the merger.

Last week, Verizon’s $4.4 billion takeover of AOL dashed those hopes. Tonight at a Fortune Most Powerful Women dinner in New York City, Yahoo CEO Marissa Mayer explained why such a deal never happened.

There was some overlap on the two companies’ video strategies, she conceded. But where AOL made a big bet on programmatic advertising, Yahoo has been focused on its “MaVeNS” businesses: mobile, video, native advertising, and social. (Fun fact: Mayer’s husband, an apparent Scrabble aficionado, came up with the acronym on the morning of the earnings call in which Mayer revealed it.)

“Some people on the outside saw similarities between the companies,” she said in an on-stage interview. “We didn’t.” It is more important to Mayer that Yahoo maintains its relationship and brand with its users and continues to provide services that those users value, “not simply help other sites monetize,” she said.

“Republishing other content partners is good, but doesn’t give you a voice or differentiate you,” Mayer said. One way Yahoo has differentiated is through the acquisition of expensive talent, such as newscaster Katie Couric, who was in the audience. Mayer noted that, based on ads sold against Couric’s video content, the hire has been a profitable investment “by all means.”

Would Yahoo ever do a merger similar to that of AOL, for greater distribution? Mayer dodged the question but did not rule it out. She noted that Yahoo is constantly looking for new distribution partnerships, similar to its deal with Mozilla, the web browser, and others it has struck with mobile carriers.

Mayer pointed out that, despite its many challenges, Yahoo is still in fairly elite club of ad-supported Web companies. Only two other publicly traded companies – Facebook and Google – have more than 1 billion users, she said. Likewise, only Yahoo, Facebook and Google have more than $5 billion in digital ad revenue.